I recently sat down with my sister, Leanne Mitchell, a local Realtor, to discuss what to know about working with a buyer's agent in Massachusetts. This article shares her experience and my recent experience with the buying process for a new home.
Finding a new home is a lot of work, but it can be the best option, depending on your family's needs today and into the future. Living in your current home is not working well—it is too crowded in the kitchen, there are too few bathrooms, and there are too few bedrooms—whatever the issue, the time has come to make a change.
Working with a buyer's agent who knows the eastern Massachusetts real estate market can make finding the right fit much easier.
The way agents discuss commissions and fees has become more transparent in recent years. While commissions have always been negotiable, in the past, many agents weren’t clearly communicating this to their clients. Sellers have never been required to pay a buyer’s agent, and buyer agency has never been “free,” despite what some agents claimed. The Department of Justice (DOJ) has mandated greater clarity regarding how agents are paid and how fees are presented in contracts.
This means that if the seller agrees to pay a buyer’s agent, this must be explicitly stated in the purchase contract. Alternatively, the buyer’s agent’s fee should be outlined in a buyer’s agency contract. While there’s no change to the negotiability of commissions, these updates ensure that fees and payment arrangements are clearly communicated and documented. Be sure to have a clear plan for how the buyer’s agent will be paid for any property you’re considering.
A Realtor can talk to you about the characteristics of the home, comparable homes in the area, and trends in the eastern Massachusetts real estate market. There are some things agents can't discuss by law and/or the code of ethics under which they work.
Agents cannot discuss demographics, such as crime statistics in a neighborhood. Buyers should look for data on crime statistics in the neighborhood and call the police department with any specific questions. Agents cannot do this on behalf of the client.
A buyer's agent should be a local guide. If you are looking at homes that need fixing, your agent should be able to give you the names of reputable contractors or design-build firms in the area.
While you are touring houses, your agent might point out aspects of a home you might have yet to notice. A tour of the attic might reveal evidence of old knob and tube wiring, for instance. There might be evidence of water infiltration along walls and ceilings. Cracks in the foundation are evidence of more serious problems that must be addressed if the home is purchased.
The point is that a good buyer agent helps you find the best home for your needs while giving you all the information they can provide so you can make an informed decision. They can help you weigh the pros and cons of what you cannot change about the home you are looking at, like location, commute times, and schools. Through this process, they provide you with useful data for negotiating the final terms of a purchase agreement.
A buyer's agent will be your advocate during the inspection process, where issues noticed during a house tour can be further investigated, and all systems and materials of the home can be visually inspected.
Suppose you are considering an addition as part of a renovation project. In that case, a buyer's agent can help you understand what is possible on this property. Zoning and other code restrictions vary from town to town in Massachusetts. A seasoned buyer's agent can help you navigate these questions and help you find the right design-build partner to make sure you are on the right side of:
In a home purchase, you can use whatever lender you want. A buyer's agent might know of lenders specializing in home renovation loans as part of the purchase. Here are a few common loan instruments for renovating a newly purchased home.
See our earlier article titled “Best Ways to Finance Your Home Renovation and Design Project.”
You can use this to cover the costs of everything from necessary repairs and energy upgrades to luxury items and custom landscaping. You'll qualify for up to the conforming loan limits (that is, the dollar cap on the size of the mortgage). This potentially gives you more borrowing power than is available from other government home renovation loans.
Borrowing Limits: The HomeStyle loan allows you to borrow up to 97% of the cost of buying and fixing up your home, which means you may need only a 3% down payment. Your loan amount is based on the renovation cost plus your purchase price or the expected value of your home after it's renovated.
Options: You can choose a fixed-rate 30-year, 15-year term, or an adjustable-rate mortgage (ARM), and you need a minimum credit score of 620 to qualify.
Like the HomeStyle loan program, Freddie Mac ChoiceRenovation loans allow you to finance a home's purchase and renovation costs with a down payment as low as 3%.
Borrowing Limits: The ChoiceRenovation loan amount is based on either the home price plus the cost of renovations or the appraised value of the home after renovations — whichever is lower.
Requirements: Renovations must be completed within a year of closing on the loan. Freddie Mac also requires a minimum credit score of 660.
You may also choose to live in the new home for a while before renovating. This allows you to discover living patterns and other aspects of the home that will inform your renovation design. In this case, your design-build partner should be able to provide you with information on potential leaders and renovation loan options.
There is no substitute for word-of-mouth recommendations. Friends and family who have had a good experience with an agent make a good referral or use a portal like the one from the Massachusetts Association of Buyer’s Agents.
The right agent will help you find homes that meet your criteria, understand the pros and cons of a given property, and guide you in finding a renovation partner for that home that needs a bit of work to make it a perfect fit.
To learn more about the home renovation process, please read our eBook, “The Homeowner’s Guide to Creating the Dream Home You’ll Love.” And if you are ready to speak about your next renovation, please schedule a home renovation discovery session.